27 Special Purpose Insurer registrations in Bermuda show popularity of collateralised reinsurance

by Artemis on January 22, 2013

Over the course of 2012 the island of Bermuda become home to 53 new international insurers, four new insurance agencies, five new insurance managers and two insurance brokerages. Of the insurers, 27 are Special Purpose Insurers and most of these have been formed to undertake some kind of fully collateralised reinsurance often with third-party capital backing them. This clearly shows the popularity of reinsurance business as an asset class among third-party capital investors.

The statistics from the Bermuda Monetary Authority (BMA) also show the popularity of SPI’s at the January renewals, with 11 new SPI’s formed in Bermuda in December alone. The SPI’s formed in 2012 include catastrophe bond issuance vehicles, collateralised reinsurance vehicles such as sidecars and catastrophe fund underwriting vehicles.

The SPI set up process allows third-party capital to be put to work underwriting re/insurance business quickly and efficiently and Bermuda remains one of the key hubs for this type of reinsurance-linked investment business.

Here are all of the newly formed insurance and reinsurance related entities that chose Bermuda as a home in 2012. We’ve linked as many of the SPI’s to related content as we can, some however remain unpublicised to date.

It is clear though from the amount of these that we’ve covered over the last year that the collateralised and third-party backed reinsurance sector is a growing part of the overall re/insurance markets operations.

The 27 SPI’s listed below all met the following criteria to be included in the SPI classification: The insurer is carrying on insurance business in the area of insurance-linked securitisations; the insurer is established to enter into a single transaction or a single set of transactions; the insurer’s obligations are fully collateralised; and transactions are carried out with a limited number of sophisticated participants.

We’ve added comments were we know the use’s of each SPI including links to cat bond deal details or to articles discussing their launch.

- Blue Water Re Ltd.The dedicated underwriting reinsurer for the Blue Capital Global Reinsurance Fund.
PartnerRe Catastrophe Fund Ltd. – A 100% owned subsidiary of reinsurer PartnerRe, likely a fronting reinsurer for their cat fund.
Queen Street V Re Limited – A Munich Re sponsored catastrophe bond; Queen Street V Re Ltd.
– Arden Indemnity Ltd.
Everglades Re Ltd. – The issuing vehicle from Florida Citizens $750m cat bond; Everglades Re Ltd. (Series 2012-1)
AlphaCat Re 2012, Ltd. – A Validus owned sidecar vehicle.
– Pendulum Re II Ltd
– Orange Grove Re Ltd.
Timicuan Reinsurance III LimitedRenaissanceRe owned third-party capital sidecar vehicle.
– Pangaea Reinsurance IV Ltd
New Point Re V LimitedAlterra owned collateralised reinsurance sidecar vehicle.
Queen Street VI Re Limited – Munich Re’s Queen Street VI Re Ltd. cat bond vehicle.
HG Re Ltd. – White Mountains vehicle to provide reinsurance support for municipal bond insurance risks.
Third Point Re Cat Ltd. – Catastrophe underwriting vehicle for the Third Point Re fund.
Eurus III, Ltd. – Hannover Re’s Eurus III Ltd. cat bond issuance vehicle.
Queen Street VII Re Limited – Munich Re’s Queen Street VII Re Ltd. cat bond issuance vehicle.
Lakeside Re III Ltd. – Zurich’s latest cat bond vehicle; Lakeside Re III Ltd.
Saltire Re I LimitedLancashires collateralised sidecar vehicle.
– Collateralised Re (U) Ltd.
– Collateralised Re (A) Ltd.
– Collateralised Re (G) Ltd.
– Collateralised Re (S) Ltd.
– Deep Blue Re Ltd.
Upsilon Reinsurance II Ltd.Another RenaissanceRe sidecar.
– Intersurer SPI Limited
Harambee Re 2013-1 Ltd.Argo’s insurance and reinsurance sidecar vehicle.
– Branco Re Ltd.

Four Class 1 re/insurers were formed in 2012. These are single-parent captive insurance companies underwriting only the risks of the owners of the insurance company and affiliates of the owners and are required to maintain minimum capital and surplus of $120,000.

– Kanti Re, Ltd.
– Venture Insurance Company Ltd.
– Maverick Re Ltd.
– Jade Re Ltd.

Two Class 2 re/insurers were formed in 2012. These are multi-owner captives and are required to maintain minimum capital and surplus of $250,000.

– Star Insurance Company Limited.
– Nostec Insurance Ltd.

Six Class 3 re/insurers were formed. These are more typically structured reinsurers writing third party business; insurers writing direct policies with third party individuals; single-parent, group, association, agency or joint venture captives where more than 20 percent of net premiums written is from risks which are unrelated to the business of the owners. They are required to maintain minimum capital and surplus of $1 million.

– ILS Property & Casualty Re Limited.
– Reliance Global Insurance Limited.
– Shor Re Ltd.
Shima Reinsurance Ltd.Tokio Millenium Re’s segregated accounts reinsurer.
– Sequant Reinsurance Company Limited.
– Stronghold Insurance Company Ltd.

Four Class 3A re/insurers formed, these are small commercial insurers whose percentage of unrelated business represents 50% or more of net premiums written or net loss and loss expense provisions and where the unrelated business net premiums are less than $50 million. Class 3A insurers are required to maintain minimum capital and surplus of $1 million.

– Arrow Indemnity Limited (Ariel Indemnity Limited).
– Allied World Assurance Company, AG.
– GMACI Re Limited.
– Phileas Insurance Company Limited.

Only one Class 4 re/insurer was formed. These are insurers and reinsurers underwriting direct excess liability insurance and/or property catastrophe reinsurance risks and are required to maintain minimum capital and surplus of $100 million.

S.A.C. Re, Ltd. – Backed by hedge fund SAC, this was one of the bigger launches of the year.

Class C was popular with nine registrations in 2012. These are long-term insurers and reinsurers with total assets of less than $250 million; and not eligible to be registered as a Class A or Class B insurer and are required to maintain minimum capital and surplus of $500,000.

– Sanlam Insurance Bermuda Limited.
– Aurigen USA Reinsurance Limited.
– Philadelphia Financial Life International Ltd.
– Philadelphia Financial Life Assurance Company (Bermuda) Ltd.
– Hedmark Insurance Ltd.
– Cambrian Re Ltd.
– Safe Harbor Re Ltd.
– Momentum Group Limited.
– AIA Reinsurance Limited.

4 underwriting agents:

– Syndicate 1910 at Lloyd’s.
– Beclar Insurance Services (Bermuda) Ltd.
– International Specialty Insurance Services, Inc.
– Telecommunications (Bermuda & West Indies) Limited.

5 insurance managers:

– Somers Risk Management Ltd.
– GMACI Insurance Management Limited.
– Stronghold Insurance Management Limited.
– Validus Managers Ltd.
– Saltire Management Limited.

2 brokers:

– Link Ltd.
– GMACI Reinsurance Broker Limited.

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